Third Quarter 2017 Results Presentation 26 October 2017 Disclaimer: This material should be read as an overview of OCBC’s current business activities and operating environment. It should not be solely relied upon by investors or potential investors when making an investment decision. OCBC Bank accepts no liability whatsoever with respect to the use of this document or its content.
Agenda Results Overview 3Q17 & 9M17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP Note: - Certain comparative figures have been restated to conform with the current period’s presentation. - Amounts less than S$0.5m are shown as “0”; - “nm” denotes not meaningful; 2 - “ na ” denotes not applicable; - Figures may not sum to stated totals because of rounding.
Group performance 3Q17 Highlights Net profit for the quarter rose 12% YoY to S$1.1b; ROE at 11.4% Earnings Net Interest Income: S$1.4b Strong income growth across core markets and businesses (3Q16 : S$1.2b) • All major subsidiaries’ local currency earnings up YoY Net profit (S$m) • GEH’s net profit contribution increased 22% YoY Non-interest Income: S$1.0b +12% YoY -2% QoQ (3Q16 : S$1.0b) • Wealth management income up 18% YoY 1,083 1,057 • Private banking AUM grew 53% YoY and 6% QoQ to US$95b Operating Expenses: S$1.0b 943 233 194 (3Q16 : S$1.0b) GEH 159 Good cost discipline with cost-to-income ratio at 42.4%; expenses Allowances: S$0.2b up only 1% QoQ while YoY increase included Barclays WIM costs Banking operations (3Q16 : S$0.2b) Overall credit quality healthy. New NPA formation eased with NPL 863 850 Net Profit: S$1.1b 783 ratio unchanged at 1.3%. Coverage ratios maintained above 100% (3Q16 : S$0.9b) ROE: 11.4% (3Q16 : 10.8%) 3Q16 2Q17 3Q17 Customer loans and deposits up 11% and 8% YoY respectively; Customer Loans: S$232b LDR at 85.3% (3Q16 : S$209b) Assets and liabilities Stable funding base, mainly comprising customer deposits, of which Customer Deposits: S$268b CASA deposits made up 50.5% (3Q16 : S$247b) CET1 ratio: 13.1% Optimised level of capital, translating into good shareholder return (3Q16 : 15.1%) on equity Capital and Leverage ratio: 7.6% Strong liquidity and funding position liquidity (3Q16 : 8.4%) All-currency LCR: 147% (3Q16 : 133%) 3
Group performance 3Q17 Group Performance Net profit increased 12% YoY to S$1.1b 3Q17 2Q17 QoQ 3Q16 YoY OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,345 3 1,234 12 1,382 Non-interest income 978 1,053 (7) 970 1 Total income 2,398 (2) 2,204 7 2,360 Operating expenses (1,001) (992) 1 (953) 5 Operating profit 1,359 1,406 (3) 1,251 9 Amortisation of intangibles (26) (27) (2) (23) 7 Allowances (169) (8) (166) (6) (156) Associates 127 119 6 105 21 Tax & non-controlling interest (“NCI”) (246) 1 (224) 10 (247) Net profit 1,057 1,083 (2) 943 12 4 4
Group performance 9M17 Group Performance Nine months net profit rose 16% YoY to S$3.1b 9M17 9M16 YoY OCBC Group S$m S$m +/(-)% Net interest income 3,999 3,801 5 Non-interest income 3,008 2,511 20 Total income 7,007 6,312 11 Operating expenses (2,967) (2,807) 6 Operating profit 4,040 3,505 15 Amortisation of intangibles (78) (72) 9 Allowances (493) (421) 17 Associates 361 314 15 Tax & NCI (717) (642) 12 Net profit 3,113 2,684 16 5
Banking Ops performance 3Q17 Banking Operations Performance Third quarter net profit before GEH contribution (“Banking Operations”) rose 2% QoQ and 10% YoY to S$863m 3Q17 2Q17 QoQ 3Q16 YoY Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,360 1,322 3 1,209 12 Non-interest income 674 700 (4) 706 (5) Total income 2,034 2,022 1 1,916 6 Operating expenses (946) (929) 2 (896) 6 – Operating profit 1,088 1,093 1,020 7 Allowances (149) (166) (10) (161) (7) Associates 131 123 6 110 19 Amortisation, tax & NCI (207) (201) 3 (186) 11 Net profit from banking operations 863 850 2 783 10 GEH net profit contribution 194 233 (17) 159 22 OCBC Group net profit 1,057 1,083 (2) 943 12 6 6
Banking Ops performance 9M17 Banking Operations Performance Nine months net profit for Banking Operations increased 6% YoY to S$2.5b 9M17 9M16 YoY Banking Operations S$m S$m +/(-)% Net interest income 3,931 3,728 5 Non-interest income 2,061 1,931 7 Total income 5,992 5,659 6 Operating expenses (2,643) 5 (2,786) Operating profit 3,206 3,016 6 Allowances (479) (409) 17 Associates 371 324 14 Amortisation, tax & NCI (592) (558) 6 Net profit from banking operations 2,506 2,373 6 GEH net profit contribution 607 311 96 OCBC Group net profit 3,113 2,684 16 7
Major subsidiaries Subsidiaries’ Performance Major subsidiaries contributed 39% to the Group’s 9M17 net profit Key Metrics YoY 9M17 9M16 S$733m +86% Net profit S$394m Net Profit Contribution to the Group S$341m NBEV +8% Great S$315m Eastern 40.4% Holdings NBEV margin -3.1ppt 43.5% S$843m TWNS +16% 19% 9M17 S$725m 12% HKD1,826m 9M16 Net profit +26% HKD1,453m OCBC 8% HKD175b Group’s Wing Loans +9% HKD160b Hang 5% 8% 9M17 net HKD210b Deposits +6% HKD199b profit: 8% S$3.1b 5% IDR1,669b Net profit +23% IDR1,358b 67% OCBC IDR103t 7% Loans +17% IDR88t NISP 61% IDR115t Deposits +20% IDR95t Rest of OCBC Group RM707m +9% Net profit RM647m OCBC RM69b Loans +2% RM68b Malaysia RM72b Deposits Flat RM73b Note: Further details on the subsidiaries are set out in the Appendix. 8 “ ppt ” denotes percentage points.
Agenda Results Overview 3Q17 & 9M17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 9
Earnings Profit before tax Earnings well-diversified across key geographies and business segments 9M17 PBT 9M17 PBT by Business 1/ by Geography Singapore OCBC Wing Others 2/ Hang S$2.1b YoY: +23% 4% 8% Greater 9M17 9M17 Global China Malaysia within which Corporate / 20% 3% S$596m 8% OCBC Wing Investment Insurance 22% 9M16 2/ Hang: 8% YoY: -2% 9M16 Banking 33% 22% 14% (9M16: 8%) 43% Indonesia 12% Indonesia 6% 6% S$229m 51% YoY: +17% 23% 18% 11% 16% Global Greater 54% Malaysia China Treasury 26% and Markets S$762m YoY: +6% Singapore Global Consumer / Others Private S$165m Banking YoY: +41% 1/ Operating profit after allowances and amortisation. Excludes the Others segment, which comprises mainly 10 property holding, investment holding, items not attributable to the business segments, as well as the offset of China operations which is reported in both the business segments and OCBC Wing Hang. 2/ This included OCBC Bank (China) from mid July 2016.
Net interest income Net interest income 3Q17 NII up 3% QoQ and 12% YoY, driven by asset growth and higher NIM 1.75% 1.68% 1.67% 1.67% 1.66% 1.65% 1.64% 1.63% 1.62% 1.62% Net interest margin (“NIM”) 5,189 5,052 1,382 1,345 1,307 1,272 1,260 1,251 1,234 Net interest income (S$m) 3,999 9M 3,848 3,801 2015 2016 9M17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 11
Non-interest income Non-interest income 3Q17 non-interest income rose 1% YoY Non- 44.0% 43.9% 43.4% 42.9% 42.5% 41.4% 40.5% 40.5% interest 38.5% 36.6% income / Total income 3,533 3,437 136 1,053 978 3,008 977 970 649 926 781 278 199 211 788 727 238 429 182 753 228 96 91 146 112 276 89 122 552 529 162 Non- 53 140 158 118 417 101 163 interest 193 192 122 123 47 45 income 127 36 122 68 49 (S$m) 40 34 1,643 1,638 492 488 481 1,461 428 417 420 374 2015 2016 9M17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Realised gain from the Net gains from Fees & Dividends & Trading Life & General sale of an investment in investment securities and commissions rental income income Insurance GEH’s equity portfolio others 12
Wealth management Wealth Management 3Q17 wealth management income grew 18% YoY across consumer banking, private banking and insurance operations; BOS’ AUM rose 53% YoY and 6% QoQ to US$95b Wealth Management Income 1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income 117 Dec 12 – Dec 16 CAGR 17% 97 22 33% 32% 32% 31% 18 30% 68 65 28% 27% 57 27% 52 25% 13 23% 14 11 9 95 79 55 51 46 789 43 2,354 741 724 2,273 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Sep 17 644 627 Loans AUM 520 Great Eastern Embedded Value 3/ (S$m) 482 Dec 12 – Dec 16 CAGR 8% 2,253 11,694 11,001 10,436 2/ 1,742 1,629 9,214 9M 8,605 2015 2016 9M17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 1/ Wealth management income comprises the consolidated income from insurance, asset management, stockbroking and private banking subsidiaries, plus the Group's income from the sales of unit trusts, bancassurance products, structured deposits and other treasury products to consumer customers. 13 2/ 9M15 included a realised gain of S$136m from the sale of an investment in GEH’s equity portfolio. 3/ An actuarial embedded value is a commonly used technique to estimate the economic value of the existing business of a life insurance company.
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